Category Archives: Cryptocurrency
The luna cryptocurrency has been resurrected after its $40 billion collapse. It’s already crashing – CNBC
Cryptocurrency markets have seen a steep sell-off after the collapse of controversial blockchain project Terra.
Dan Kitwood | Getty Images
A new version of the collapsed luna cryptocurrency is already live on major exchanges and it's gotten off to a bad start.
Last week, supporters of the Terra blockchain project voted to revive luna but not terraUSD, a so-called "stablecoin" that plunged below its intended peg to the dollar, causing panic in the crypto market.
TerraUSD, or UST, is what's known as an algorithmic stablecoin. It relied on code and a sister token, luna, to maintain a $1 value. But as digital currency prices fell, investors fled the stablecoin, sending UST tumbling and taking luna down with it.
At its height, the old luna now known as "luna classic" had a circulating supply of over $40 billion.
Now, luna has a new iteration, which investors are calling Terra 2.0. It is already trading on exchanges including Bybit, Kucoin and Huobi. Binance, the world's largest crypto exchange, says it will list luna on Tuesday.
Its launch has not gone well.
After reaching a peak of $19.53 on Saturday, luna dropped as low as $4.39 just hours later, according to CoinMarketCap data. It has since settled at a price of around $5.90.
Analysts are deeply skeptical about the chances of Terra's revived blockchain being a success. It will have to compete with a host of other so-called "Layer 1" networks the infrastructure that underpins cryptocurrencies like ethereum, solana and cardano.
Terra is distributing luna tokens through what's called an "airdrop." Most will go to those who held luna classic and UST before their collapse, in an effort to compensate investors.
But many investors burned by the debacle are unlikely to trust Terra a second time, experts say. Vijay Ayyar, head of international at crypto exchange Luno, said there's been a "massiveloss in confidence" in the project.
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The luna cryptocurrency has been resurrected after its $40 billion collapse. It's already crashing - CNBC
Top cryptocurrency news on May 30: The biggest moves in crypto prices, policies and more – Moneycontrol
Cryptos crumble but VCs remain gung-ho on future prospects
According to a report compiled by financial services and investment management firm Galaxy Digital, Venture Capitalists (VCs) have invested over $10 billion in crypto startups in the first quarter of this year. Just earlier this week, VC giant Andreessen Horowitz announced the close of a $4.5bn crypto fund that focuses on Web3 startups. Also, a group of former executives from Binance, one of the largest global cryptocurrency exchanges, announced a $100-million venture fund called Old Fashion Research earlier this week, to bring greater crypto adoption to growing markets like Latin America and Africa. Singapore-based VC firm NGC Ventures also launched a $100-million fund dedicated to high potential Web3 projects and metaverse economies. According to experts, blockchain and not crypto, is the underlying reason for these investments, with crypto being one of the use cases of the blockchain. Read details here
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Top cryptocurrency news on May 30: The biggest moves in crypto prices, policies and more - Moneycontrol
‘We’re in a bear market. And I think that’s good’: Crypto firms hope market slump shakes out bad players – CNBC
Executives from the blockchain and cryptocurrency industry told CNBC that the recent crash in the digital coin market should help get rid of "bad actors" in the space.
Billions of dollars of value has been wiped off the cryptocurrency market in the last few weeks driven by a sell-off in stocks and the collapse of algorithmic stablecoin terraUSD and its related token luna.
"We're in a bear market. And I think that's good. It's good, because it's going to clear the people who were there for the bad reasons," Bertrand Perez, CEO of the Web3 Foundation, told CNBC at the World Economic Forum in Davos, Switzerland.
"It's good also, because all those projects are gone. So the legit ones will be able to focus only on developing on building and forget about the valuation of the token because everyone is down."
"During the ... bull markets when everything is green, no one thinks about building, everyone thinks about making a fortune, which is ... the wrong mindset," he added.
Mihailo Bjelic, co-founder of blockchain company Polygon, echoed the sentiment, calling the cryptocurrency sell-off "necessary."
"[The] market, in my personal opinion, became maybe a little bit irrational, or maybe a little reckless to a certain extent. And when the times like that come, [a] correction is normally needed, and at the end of the day [is] healthy," Bjelic said.
The sell-off in major digital currencies such as bitcoin and ether was sparked by a broader slump in stock markets, in particular the technology sector. The drop was worsened by the terraUSD stablecoin losing its $1 peg.
Large, institutional investors have been getting involved in the cryptocurrency market, and were also a key driver of the latest sell-off, according to Brett Harrison, president of cryptocurrency exchange FTX U.S.
He said that there has been a broader drop for risk assets, such as stocks, but that it's affecting digital coins more than it has in the past because there is more institutional money in the space.
"If people are looking for assets to sell, crypto is going to be on the list," Harrison told CNBC.
Brad Garlinghouse, CEO of Ripple, urged investors to take a longer term view.
"Bitcoin about two years ago right now, bitcoin was about $8,000. Now it's at 30,000. So yes, there's been a crash and a trillion dollars came off. But when you zoom out a little bit further and look at the long term trends, I think you see that crypto is here to stay," Garlinghouse told CNBC.
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'We're in a bear market. And I think that's good': Crypto firms hope market slump shakes out bad players - CNBC
Provision Allowing Cryptocurrency Payments in Foreign Trade Added to Russian Bill Regulation Bitcoin News – Bitcoin News
A proposal to permit companies to use cryptocurrency in cross-border settlements has made its way to a draft law designed to regulate Russias crypto space this year. According to a press report, the finance ministry has introduced a number of revisions to the legislation it has been working on in the past few months.
The Russian Ministry of Finance has revised its draft law On Digital Currency to reflect various suggestions by other government departments and agencies, the business daily Vedomosti unveiled, quoting government sources. The amendments have been coordinated with the ministries of economy, digital development, internal affairs, the Federal Tax Service, and Russias financial watchdog, Rosfinmonitoring.
The one major institution missing from that list is the Central Bank of Russia, which remains opposed to any legalization of cryptocurrencies like bitcoin and respectively disagrees with the Minfins regulatory concept which aims to establish a legal market for digital assets. The ministrys legislation was first submitted to the federal government in February.
There is a wider consensus among Russian authorities that cryptocurrency should not be accepted as legal tender in the country. The law On Digital Currencies bans the use of crypto assets as a means of payment but suggests recognizing them as an investment tool.
Nevertheless, a provision introduced with the latest revisions would allow Russian legal entities and individual entrepreneurs to use cryptocurrencies for payments with foreign counterparties, Vedomosti revealed. The news comes after the Interfax news agency reported earlier that the finance ministry is considering this option as Russias access to the traditional payment channels is limited by western sanctions imposed over the war in Ukraine.
Among the other proposals incorporated in the revised bill is a ban on the advertising of crypto trading platforms that are not licensed to operate in Russia. At the same time, authorized exchanges may be obliged to store information about cryptocurrency holders and their transactions for a period of three years and share the data with Russian law enforcement. Only customers that have passed identity verification will be able to buy and sell cryptocurrencies and only through Russian bank accounts.
Do you expect Moscow to allow Russian companies to use cryptocurrencies in their foreign trade activities? Tell us in the comments section below.
Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchenss quote: Being a writer is what I am, rather than what I do. Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
Image Credits: Shutterstock, Pixabay, Wiki Commons
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Provision Allowing Cryptocurrency Payments in Foreign Trade Added to Russian Bill Regulation Bitcoin News - Bitcoin News
Lets bust 5 biggest myths about cryptocurrency – The Indian Express
In the last few years, cryptocurrencies have grown in popularity. The crypto market is believed to be profitable but is no less than a roller-coaster ride. Indeed, many cryptocurrencies have already evaporated with the recent crash in prices. But the ingenious technology underpinning cryptos will transform the nature of money and finance.
With so much jargon and other unfamiliar words in the world of crypto, it can be very confusing for newbie investors to understand the crypto-sphere. In todays column, well be busting the most common myths circulating in the crypto-world.
Cryptocurrencies such as Bitcoin and Ethereum were originally designed for making payments without the need for fiat currencies, credit cards, debit cards or anything that is centralised.
The white paper, written by Satoshi Nakomoto, a pseudonymous Bitcoin creator, clearly states that it aims to facilitate transactions between any two willing parties to transact directly with each other without the need for a trusted third party.
While we see many restaurants globally and even countries like El Salvador accepting Bitcoin as a mode of payment for buying daily essentials, Bitcoin or any other crypto cannot practically be a default mode of payment. But, you may ask why?
The simple reason is that facilitating transactions on crypto comes with a cost known as a transaction fee which is way more expensive than the current banking systems. Secondly, It is excessively slow, it could take more than 10 to 15 minutes for one transaction to occur, this is because every transaction has to be validated and is subjected to the number of crypto validators or miners on a blockchain. Some cryptos like Ethereum process transactions faster, but again it can be quite expensive.
Thirdly, cryptos are volatile, meaning they are subjected to wild swings. So, if you have 1 Bitcoin worth say Rs 20 lakh today, it is not necessary that you would get the same value for it a week later. It could probably be much less or way moreall depending on the current market and price rates.
For instance, in late April, the price of a Dogecoin was 20 cents. It tripled in the next two weeks and then fell to half that peak value ten days later. It is as though a $10 bill could buy you just a cup of coffee one day and a lavish meal at a fancy restaurant just a few weeks later.
A very common notion is that Blockchain and Bitcoin are the same two things. Whenever someone talks about blockchain, it is immediately linked with Bitcoin. However, Blockchain is the technology that is essentially a distributed database recording transactions that occur on it. This technology has several user cases, one of which is cryptocurrencies.
What makes Blockchain technology powerful is that it is immutable, meaning it cannot be edited or modified. Cryptocurrencies as mentioned are one of the use-cases of Blockchain. These are algorithms that run on the blockchain and hold some intrinsic value that can be exchanged for fiat. Further, cryptocurrencies are secured with cryptography which makes it impossible for anyone to change their value of it.
Cryptocurrencies are not only used for illegal activities. It has some legit uses such as tradingbuying or selling, facilitating transactions not only money-related but contractual transactions as well. In simpler words, the Ethereum blockchain has something called a smart contract that makes every type of transaction possible on its network. For instance, non-fungible tokens (NFTs) operate on smart contracts. It is essentially an algorithmically designed contract that runs automatically when a specific condition is met. A good example would be how NFTs give the right to exclusive owners via smart contracts. Users can mention their name on the smart contract, which again can never be changed, this is what makes crypto special.
But the fact is that crypto-related crimes have increased. In 2021, cybercriminals laundered $8.6 billion in crypto, up by 30 per cent from 2020, according to crypto analytics firm Chainalysis. As a result, governments globally are putting together task forces to deal specifically with the crypto crime and pushing legislation forward.
When the word crypto is often heard, anonymity is what comes to a newbie users mind. While crypto offers anonymity, in terms of your details such as your name, address, and contact information, this is not something that cannot be tracked down.
Any transaction made on Blockchain is recorded with the senders and receivers crypto-wallet addresses. All the transactions coming and going through from this wallet, are recorded on the blockchain, which is of public view. However, central authorities have made KYC mandatory with exchanges so eventually, your wallet address will be tracked down. Hence crypto transactions are also called pseudo-anonymous.
Last but not the least, cryptocurrencies are often called a big bubble which will eventually burst, and cease to exist. This comes as European Central Bank President Christine Lagarde recently called cryptocurrencies based on nothing.
But this is not the complete truth. It is speculative to say whether crypto will fade or not but it is important to understand that it is a technology not just some price based coins that it is being compared to. It is triggering transformative changes to money and finance.
A particular crypto coin might fade away but not the technology that it works on. However, the crypto-industry is still evolving with newer things coming into the picture like the recent craze about NFTs and metaverseall fueled by cryptocurrency.
It is interesting to see how mainstream companies have taken interest in crypto, and in some cases, themselves invested in crypto. With sensible regulations, crypto can be a win-win for everyone.
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Lets bust 5 biggest myths about cryptocurrency - The Indian Express
Cardano can be scarce like the king cryptocurrency – The Coin Republic
According to ADA whale, a Cardano community-focused Twitter account, Cardano remains one in every of the few coins that comes on the point of Bitcoin distribution and inflation. He additionally feels that adenosine deaminase may become an extremely scarce plus at some point within the future, because it might follow a BTC-like path. The ADA whale thinks that Bitcoin got its dynamics right due to its truthful distribution, its worth staying low long enough to permit several to buy, and its mounted offer.
Satoshi Nakamoto, the enigmatic Bitcoin creator, believes that deficiency may produce value. Hence, the most supply of Bitcoin was restricted to twenty one million coins. The nineteen millionth Bitcoin was strip-mined in April, exploiting solely 2 million BTC to be mined in approximately a hundred years.
Cardano, like Bitcoin however in contrast to Ethereum, has a finite offer limit, with only forty five billion adenosine deaminase ever to be created over the coin existence. Presently, 33.82 billion ADA are in circulation, accounting for 75% of the most supply, and 34.27 billion ADA are created therefore far, per CoinMarketCap data. However, due to continued unfavorable market conditions, the ADA whale believes that currently might not be the time to laden on ADA. this is often a bear market, therefore be ready for presumably months of integer negative returns if you do. simply making an attempt to place it into a semi permanent perspective.
consistent with the most recent weekly report by Cardano parent company, IOHK, the closed Vasil testnet has already been launched to assess its practicality with a cluster of dApps and users. The Cardano team continues to figure on consensus-specific enhancements in anticipation of the Vasil exhausting Fork Combinator (HFC) event in June.
In addition, IOHK provided a chart with network growth information. Currently, 986 homes are being built on Cardano, up from 943 previously. A total of eighty eight projects have recently been launched on Cardano, whereas the number of NFT projects has increased to 5,727. For the week, Github connections destroyed 3,028, while adenosine deaminase stood at 4.9 million. Also, the number of Plutus scripts was 2,745.
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Cardano can be scarce like the king cryptocurrency - The Coin Republic
One Smart Choice and 2 Regrets From a Young Cryptocurrency Investor – Business Insider
Cryptocurrency investor Ariel Fox, 29, doesn't have many regrets about getting into buying and selling coins. Unperturbed by the recent crash, Fox's portfolio is still worth more than the initial dollars she invested into it, and she finds buying and selling cryptocurrency to be preferable to being a retail investor in the stock market.
"There are a lot of people who have access to information about stocks in the market that the average retail investor may not have," said Fox. "But if you get in at certain crypto projects at the right time, you are able to profit from that. It is somewhat speculative, just like stocks but it's also very interesting to me. It's exciting, it's growing."
Fox first heard about Bitcoin all the way back in 2009 when it was first released, but she didn't start investing in crypto until late 2020. She said that she's learned a lot along the way.
Fox said that the smartest thing that she did with her coins was invest them across different websites in order to earn more interest on them.
She originally kept her Bitcoin holdings primarily on Coinbase, but then "scattered it across some different marketplaces in order to invest in other coins. Eventually I collected it all together and put it into BlockFi where I earn interest on those holdings."
Fox added that her returns on interest is why she keeps a big chunk of her portfolio in the Gemini stablecoin (GUSD) which is backed up by US dollars and is pegged to the value of the US dollar. Currently, she steadily earns anywhere between 7% and 9% interest on her GUSD holdings.
One choice that Fox regrets making with her cryptocurrency portfolio is selling certain coins early because they spiked in price, not realizing how much higher they would later go.If she could do things differently, she would have "held some back for myself, just to watch and see how it fluctuated."
That said, Fox added that it's really hard to time the market in general, and that she doesn't recommend it. Sometimes the chips fell in her favor for selling early."There are other times where I sold, and the price dropped not too long after, and that was a smart sell for me," she said.
Another regret that Fox has was that she didn't learn about "gas fees" sooner. In cryptocurrency trading, a gas fee is a cost an investor incurs when they are trading or converting coins on the Ethereum blockchain.It requires a lot of computational energy to convert coins on this blockchain, and the gas fee at any given time can vary depending on many factors.
"When I was investing in a project, I had to convert Ethereum to this other coin and I had to pay a fee to convert it," said Fox. "You can time it so that your gas fee is lower. I didn't know."
Fox added that she "spent so much money on gas fees that I did not have to spend because I did way too many transactions, and I did it in a very busy time at the market."
A.J. Jordan
Personal Finance Reporter
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One Smart Choice and 2 Regrets From a Young Cryptocurrency Investor - Business Insider
Learn More About The Ecosystems Of Cryptocurrency Shiba Inu (SHIB), Binance Coin (BNB) and Mushe (XMU) – TechCabal
Cryptocurrency is a unique sector in the finance industry which has shaped greatly the way we look at money. Almost everybody has digital assets these days, do you?
Cryptocurrency is a form of digital currency that allows users to transfer currency in a digital setting and is different from regular digital transfer products and applications.
The primary purpose of cryptocurrency is to provide a digital currency system that is not owned by only one central body. Thus, cryptocurrency is built and designed to be decentralised.
This way, the network participants run software and technology that connects them to other nodes, so that information can be shared conveniently. Crypto uses cryptographic techniques to make sure transactions between users remain secure.
Due to the security and lack of a central body, otherwise termed decentralisation, cryptocurrency has become a widely known investment choice for many newbies and veteran investors worldwide.
In the next few years, digital finance will be one of the biggest financial sectors in the world, as many companies are now integrating cryptocurrency into their payment platforms.
Different cryptocurrency projects come up in different cryptocurrency niches to solve different problems related to the crypto space.
However, there are some cryptocurrency tokens with a huge ecosystem that works across different parts of the crypto space all at once. Some of them include Shiba Inu (SHIB), Binance Coin (BNB), and Mushe (XMU).
Although some critics have called it a useless investment, Shiba Inu was one of the most successful investments in 2021.
Shiba Inu is a cryptocurrency meme token founded based on a Doge meme of a Japanese dog breed, Shiba Inu.
SHIBfollows the footsteps of the top meme coin, Dogecoin. It is even called the Dogecoin killer.
The network functions as an ecosystem of a community-driven crypto project. This means that the decentralised Shiba Inucommunity is in charge of what happens to the cryptocurrency and also its development.
This community is known as the ShibArmy. The Shiba Inuecosystem is built of Ethereum to enable it to conveniently run smart contracts.
The Shiba Inu ecosystem is divided into different tokens and sectors that run the entire ecosystem. The first is SHIB,which is the foundational and main token of the ecosystem. SHIB is used as a medium of exchange and can be traded. The others are LEASH and BONE, used as staling rewards and voting rights, respectively.
Binance Coin(BNB) is another cryptocurrency token that runs on a huge ecosystem that offers different services.
Binance coinwas created by Binance in 2017 as an ERC-20 token on the Ethereumplatform. The Binance Exchange ecosystem is a wide one.
The major function of this ecosystemrelies on the Binance crypto exchange platform, which is very popular in the cryptocurrency world as it is a platform for traders to store and trade crypto.
Binance Coin (BNB)is the utility token of the platform. It is used by users to get discounts while paying for trading fees and also to pay for travelling expenses, virtual gifts, shopping, etc.
The Musheecosystem is a decentralised peer-to-peer contract system created to aid interaction and governance and give its users rewards.
The Mushe(XMU) ecosystem was created to break the barriers between ecosystems and improve the interoperability between different blockchains.
XMUplans to improve the adoption of blockchain technology by providing digital access to these blockchains for everyone, whether newbies or veteran investors, while growing the social effect through teaching how digital currencies and economic management intersect.
The utility token for this ecosystem is XMU.It is an ERC-20 platform as it is built on the Ethereumnetwork. This XMUtoken rewards its users for staking and is a major exchange medium in the ecosystem.
Cryptocurrency is constantly growing, and with the increase of these ecosystemsthat try to fix the loopholes in the cryptocurrency sector, it will soon become top-notch. You can join the Mushepresale or learn more about it through the links below.
Join Mushes Presale:
https://portal.mushe.world/sign-up
Keywords: Binance coin, BNB, Shiba Inu, SHIB, Ethereum, Mushe, XMU, Cryptocurrency
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Learn More About The Ecosystems Of Cryptocurrency Shiba Inu (SHIB), Binance Coin (BNB) and Mushe (XMU) - TechCabal
Critical Emerging Technology: Claiming and Disclosing Blockchain, Fintech and Cryptocurrency – IPWatchdog.com
A blockchain is a digital ledger comprised of so-called blocks. Every piece of new information uploaded to the digital ledger is a block having a set of data. Once these blocks are linked that is, every time that new information is uploaded via a block it becomes part of the digital ledger for forever and all time; the blocks cannot be edited, deleted or modified, even by the company or person who initially created the blockchain. Because the history and genesis of blockchain data cannot be altered or deleted, blockchains are a valuable tool for identifying the provenance of an item and tracking the path from its original source to its ultimate destination.
A first example of blockchain usage is that blockchains can be implemented for understanding the genesis and lifespan of electric vehicle (EV) batteries. EV batteries are comprised of battery modules and battery cells, which can be either recycled or refurbished through multiple uses. Imagine the scenario in which an owner of an EV vehicle would like to know whether a battery that has been used over a certain lifetime can now be refurbished or partially refurbished in order to save cost. To do so, the owner wants to check if it is possible to replace some of the modules in the battery rather than the entire thing, which is far more expensive. Alternatively, the dealership may want to check whether an EV battery can be recycled for environmental purposes. But in order to make these kinds of decisions, a thorough diagnosis of the battery involving a comprehensive history of the battery and its physical components is desired.
By utilizing blockchain, each time the battery is charged, new data can be inputted to a blockchain for the battery. Other uploading events can include whether the battery has died or when the vehicle turns OFF and ON, indicating initiation or termination of use, etc. All of these events stimulate an automatic uploading of battery state information to the blockchain. Over time, the compendium of this information can be used to deduce the charge capacity of the battery components and how that has changed over its lifespan. This way, a decision can be made as to whether the battery needs full refurbishment or partial refurbishment, or whether the battery should be recycled or just tossed out. This will save money and lead to environmental benefits when implemented on a large scale.
As a patent practitioner, how would you claim the system just described? The first thing to think about when confronted with this question is to imagine the components involved for someone (like a potential infringer) to practice this type of invention. Specifically, what are the physical components needed? With the EV battery example, you can claim this as a system claim having at least one EV battery. Because the purpose of the entire system is to understand the chargeability capabilities of the battery over time, an electronic controller (ECU) with a processor and computer memory that stores the state of charge information is needed. The ECU will likely be part of a vehicle that has the battery, a mobile device with an app for the EV battery ledger, or it can be a central processing unit (CPU) on a cloud server. The system will also need a wireless communication unit to upload the information to the blockchain. An alternative to a system claim is an apparatus claim directed to a vehicle equipped with at least one EV battery, an electronic control unit and a wireless unit for uploading information to the blockchain.
Blockchain can also be used in FINTECH (financial technology). Banks can use blockchain to request confirmation of security information with immediate response using blockchain in order to expedite transactions. When thinking about what components to claim with FINTECH, software example components (e.g., parts of a computer or a computer program) can be algorithms and applications for a processor, the processor or microprocessor itself, or virtual reality (VR) trading platforms. All computers have some kind of storage that stores transitory or long-term computer-readable media. You can also think about claiming external storage such as memory that is not part of the computer the user is using (i.e., the blockchain or a cloud). Wireless communicators will be needed to upload the information to the blockchain so you can claim receivers and transceivers or Bluetooth capabilities.
When considering hardware components to claim, always think about what parts will be used by the user, what is gathering information or input. Think about claiming scanners (such as eye scanners or fingerprint scanners), sensors of all types, cameras, etc. Also think about whether the information to be processed will be inputted manually by a user or an operator, such as via a keyboard or a touchscreen. With mobile banking, the user is likely using an app like Venmo on a mobile device and will be inputting information via the touchscreen. Also, there has to be a display screen for the user to receive messages or information whether that be on a mobile device, an ATM or a computer screen. So a display screen is a physical component that can be claimed as well.
Recently, the Southern District of New York granted a motion to dismiss in favor of Block Inc. against AuthWallets patent assertion on the grounds that AuthWallets asserted claims are patent ineligible subject matter under the Alice Doctrine. AuthWallet owned a patent for a method and system for processing financial transaction data that involves a process of confirming authorization for transactions by the user. AuthWallets system included a processor, a storage component, a communications module and a stored value module. The court found that the claims only recited generic computer functions to be carried out by conventional computer components. What is the court saying here? The court is essentially saying that there is no technical improvement recited in these claims. Since there is no special purpose computer but only generic computer processes in AuthWallets claims, the claim needs to recite some kind of technical improvement to the way the computer functions. End user benefits are not considered technical improvements either at the Federal Circuit or at the Patent Trial and Appeal Board. Here, arguably a human brain can be a storage component, a communications module or a stored value module, as claimed in AuthWallets patent. It can be difficult to see the technical improvement in these kinds of claim recitations.
To learn more, watch the latest IP Practice Vlog here.
Is Now A Good Time To Invest In Cryptocurrency? – Seeking Alpha
Laser-Eyed Folks Be In Triage Right Now
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DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
To answer this question, first, we shall declare our own stance on cryptocurrencies; you can use that to interpret the rest of this note which will help you decide whether this work is of any use to you!
In short, whilst we are no spring chickens here at Cestrian, neither are we boomers. This gives us, we think, some degree of neutrality as regards the utility and longevity of crypto as an asset class. Nobody here uses crypto as anything other than an investable, tradable security, because no one knows why they would need to actually ever spend it. In consequence, nobody here has ever owned crypto in its native form, preferring to gain exposure to it through funds (Grayscale Bitcoin Trust (OTC:GBTC), Grayscale Ethereum Trust (OTCQX:ETHE), ProShares Bitcoin Strategy ETF (BITO)) or stocks (Coinbase (COIN) at present; Marathon Digital (MARA) and Riot Blockchain (RIOT) in the past). (We can give you all kinds of high falutin reasons for this, but in the end, it's because we just know that we will lose our cold wallets and be that guy combing through the municipal landfill to find what was meant to be his future Lambo but is now just a soggy USB stick covered in carrot mush).
To us, the asset class is something of a curio. We neither see immediate personal utility, so we aren't true believers; nor do we think "bah humbug, this scam will end badly for those pesky kids". Mainly though, as career tech investors we long ago learned that writing off the new-new thing is usually a mistake. So in investing generally we lean toward growth and our interest in crypto is from that angle.
Amongst the laser-eyed community, you will find a clear division drawn between "fiat currencies" and "decentralized crypto". Fiat, they argue, is a scam, being government-controlled, deflatable at will by central bank policy, and so forth. Old folks on the other hand believe that crypto is no more than a grand pump & dump scheme which will inevitably end in disaster because the fundamental value of any particular crypto is zero.
Neither of these extreme views is quite true, of course. The value of any currency is formed only by consensus, just as is the case for the value of any particular security. What is the correct price of the SPDR S&P 500 Trust ETF (SPY)? There is no correct price! The correct price is what market participants are agreeing to pay one another at the current time. You can have an opinion about what market participants may decide to pay one another in the future, and you may invest or trade on the basis of your opinion, but nothing about this calculation is based on any kind of immutable physical reality; it's just opinion.
Actually, the common term 'fiat', usually used to mean currencies not pegged to physical goods like gold, can also be dispensed with here because, what is gold worth? Again, it's just worth what folks agree to pay one another at any particular time.
So let's use a different lens. Let's talk about state-backed currencies like the dollar or the euro or the yen, etc., and then about crypto.
The rise of state-backed currencies was, as the name suggests, a function of the rise of the nation-state. And the rise of the nation-state was a function of the ability of those who sought to obtain and maintain political power to be able to centralize and enforce that power through actual or threatened violence which they deemed to be the sole form of legitimate violence. If you want to read the long-form version of this theory, you could start by reading the OG, Thomas Hobbes, whose Leviathan may have been written in the seventeenth century but remains a pretty darn accurate portrayal of what the state is and why. If you're busy, however, just watch the Clint Eastwood western, Hang 'Em High, which makes all the same points.
State currencies are only valuable because somebody says so. In the Middle Ages, the sovereign. Today, federal governments and market participants.
Cryptocurrencies are only valuable because somebody says so. Since Satoshi never did wield any centralized power, Bitcoin's (BTC-USD) viability comes down to its market participants.
To us, it's that simple.
The question is, will market participants decide that crypto will be worth more, or less in the future? The whole ecosystem just got slammed as risk appetite was reduced, and the minor coins in particular have been roadkill. We suspect most of them will remain that way because they lacked the critical mass to be self-sustaining when trouble hits. Per Hobbes, life has indeed proven nasty, brutish, and short for many of them.
Our own interest is in Bitcoin and Ether (ETH-USD), the two major cryptos by market capitalization. So far they have been damaged by the selloff but no more than your average too-hot-to-handle growth stock. So let's dig into these some.
Now for some other out-loud statements of our own prejudice. We believe that at a minimum, two cryptocurrencies will survive and probably prosper long term.
Bitcoin, because it is the closest to the gold standard amongst crypto. It is truly decentralized, doesn't have a guru (or furu!) type leader espousing its potential to change the world or change your ability to fund your kids' college fees, and it has been around a long time now. Institutions have started to invest in Bitcoin in reasonable number and they have most likely done so as they follow the changing demographic of their clients. If GNUs Not Unix, Bitcoin Is Not Beenz.
And Ether, because although it most certainly does have a founding guru it also actually has utility insofar as you need it for 'gas fees' for transactions on its blockchain... and crucially its blockchain might become a major transaction bus for the Metaverse even as the Metaverse goes mainstream. And by the way we very much believe that the Metaverse is a thing and going to be more of a thing.
Crypto in our view can only be invested in or traded on a technical basis, specifically because it lacks fundamentals. Now, in our own work, we find that trying to invest or trade on technicals is risky in the extreme when dealing with niche assets - which for us means most if not all the altcoins - because the crowd behavior that technical trading methods attempt to measure and predict doesn't take place in a way consistent with those technical methods. Whilst all technical methods differ, generally speaking, they work best in highly liquid instruments that are freely traded by both institutions and retail alike. We like to use the Elliott Wave / Fibonacci method in our work - not because we believe it is the unique or supremely valid method but because we've found success with it. And the more liquid, the larger, the less related to fundamentals of the instrument, the better we find the method works. Take SPY - the S&P500 proxy ETF - for instance. Since the 2016 lows, we find it has moved with textbook clarity according to wave & Fibonacci principles - the extensions up and retracements down have (so far! let's see how the rest of 2022 plays out) been very predictable in this system. You can open a full-page version of this chart, here. (And before you ask, yes we did call the bottom in March 2020 and yes the top in November 2021, in our subscriber service Growth Investor Pro where those articles can still be found).
SPY Chart (TradingView, Cestrian Analysis)
So let's take a look at whether either Bitcoin or Ether can be traded using this method. Best guess is that Bitcoin suits the method better than Ether, because it is larger, better known and has more institutional involvement.
First, the past. From the 2018 lows, BTC puts in a Wave 1 up followed by a Wave 2 down that troughs a little below (our) ideal 0.786 retracement. It then puts in a monster Wave 3 up peaking at the 5.618 extension of Wave 1, which is crazy and rarely seen in our world. For comparison, the recent highs in SPY, the Invesco QQQ ETF (QQQ) and ARK Innovation ETF (ARKK) represented the 1.618, 2.618 and 3.618 extensions of their respective prior wave 1s up. Yes, that spooked us out too but it's true. So 5.618 up is truly extended and investors would have reasons to be fearful at that point. Then comes a Wave 4 down troughing at a textbook 0.618 retracement of that Wave 3 - and then a new Wave 5 higher that peaks just above the prior Wave 3 high. So from the end of 2018 to early November 2021, we can say, yup, this method seems to work quite well.
BTC Chart (TradingView, Cestrian Analysis)
Let's look at the 'hard right edge' now though. Can we use the method to forecast what happens next? In this method, at least as we use it, we like to find a Wave 1 up and a Wave 2 down that conforms to type (specifically a 0.786 retracement of the W1 up) to give us confidence in projecting the period to come. We don't have that yet in BTC. We think that BTC is in a 'larger degree' Wave 2 down, like this (full page version, here)
BTC Chart II (TradingView, Cestrian Analysis)
So far that Larger Degree W2 down found support at the 0.618 retracement of the Larger Degree W1 up. That might prove to be the bottom of the wave but (1) the 0.618 level was breached once already and (2) that A, B, C corrective pattern you see in light blue - if you want a really high confidence statement to say a correction has ended, you want to see A = C, i.e., the price drop in the A-leg is the same as the price drop in the C-leg. We don't have that yet. A=C would put BTC in the mid-12000s. Countering that you could say, well, that's below the 0.786 retracement level (17,200) so that's not likely - but countering that you could say, well, the last substantial W2 down in BTC - the drop into the Covid crisis - troughed below the 0.786 too. Because crypto be like that - super volatile.
Supporting that analysis would be - look at the volume profile. The first high volume node (where a whole lot of volume was transacted) doesn't start until the 14,200 area - that will likely prove stronger support than the present price which has nothing but low volume nodes around it (indeed the whole move up from the mid-14ks to the high 60ks can be seen to be a fairly low-volume exercise, which can explain why the instrument was so easy-up as well as why so easy-down).
Our conclusion on BTC for now is: we do believe it will ride again, we aren't sure the selling is done yet, and whilst we hold some BITO recently acquired, we will likely take short term profits should they arise rather than trying to play long-longtime from here. If the 0.618 retrace holds firm then we would change our view but our gut is, a bear rally now, then another leg down, then a true move back up.
Ether?
Ether Chart (TradingView, Cestrian Analysis)
It may amuse you to see exactly the same pattern as BTC! The Wave 3 up was an even crazier extension but the big Wave One up and the big Wave Two down are now at the same place, i.e., trying to find support at that 0.618 retracement of the larger degree wave one up (that means around 1867 may prove to be of support) but with risk to the downside because the A-B-C correction hasn't concluded (yet) at A=C. If A=C that puts ETHUSD at around 800, again below the 0.786 retracement. So for Ether we think - there can most certainly be some short term upside but speaking for staff personal accounts we will probably not be treating that as a real move up until such time as support is really proven, i.e., with multiple retests, the rest of the market also moving up, etc.
Our own view is that Bitcoin and Ether are here to stay and that they are investable. If you were minded to open new positions in both - directly or via proxies such as GBTC and ETHE - we can see the sense in starting now but we would suggest not betting the farm, instead waiting to see if this is just temporary respite from selling until a lower low forms support.
If we got a 0.786 retracement in these two cryptocurrencies, we would be much more inclined to start layering in bigger allocations in the hope of enjoying the next major ride upwards.
Cestrian Capital Research, Inc. - 23 May 2022
Read the original:
Is Now A Good Time To Invest In Cryptocurrency? - Seeking Alpha